Islamic Fiqh > Companies and leases > The conditions of the company (shirkat al-amwal) > Sixth requirement: knowledge of the amount of the capitals
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Updated on 25 September 2026 at 6:57 PM
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The Hanafis hold that knowledge of the amount of the capital at the time of the contract is not a condition of the validity of the partnership on capitals. Al-Kasani said: this knowledge is not a condition with us, whereas it is with al-Shafi'i. For him, ignorance of the amount of the capital leads to ignorance of the profit, whose knowledge is a condition of this contract; the knowledge of the capital therefore becomes a condition. Our answer: ignorance prevents the validity of the contract only because it leads to dispute, and ignorance of the amount of the capital does not lead to that: its amount is known apparently and in general, for the dirhams and dinars are weighed at the purchase, so that their quantity is known; ignorance of the amount of the profit at the time of division therefore does not follow (Bada'i' al-Sana'i', 6/63).
The Shafi'is, on the sounder view: knowledge of the amount of each one's capital, whether it is the half or otherwise, is not required at the contract when it can be established afterwards by an account or an agent, for the right does not exceed their capitals and they agreed upon something other than the unknowable. On the second view, it is required, else each would remain ignorant of what he authorized and of what was authorized against him. The origin of the disagreement: if two men share common property of which each is ignorant of the amount of his share, and each authorizes the other to dispose of his share, the authorization is valid on the sounder view, and the price is between them as if appraised; even if they are ignorant of the amount while knowing the proportion, for instance if one places the dirhams on a scale pan and the other the equivalent opposite, it is valid definitively, for there is no harm in it, their mutual consent being established (Mughni al-Muhtaj, 3/188; Nihayat al-Muhtaj, 5/9; al-Dibaj, 2/298; al-Najm al-Wahhaj, 5/14).
The Hanbalis require each of the two capitals to be known in amount and description at the moment of the contract, for the capital must be returned, which is impossible in ignorance of it. If they partner on mixed, undivided property received by inheritance or given as a gift, of unknown quantity, the contract is valid if they know the share of each, half, quarter or otherwise: the gharar thereby disappears (al-Insaf, 5/408; Kashshaf al-Qina', 3/582; Sharh Muntaha al-Iradat, 3/547; Matalib Uli al-Nuha, 3/497; Manar al-Sabil, 2/180). The condition in this latter case is that the thing be knowable after the contract; if it is not, the contract is void: if they own two garments and mistake them for one another, that does not suffice to found the partnership, for the garment of each is distinct from the other's; the confusion would be merely accidental.
The share of each of the two partners must be known, half, third or quarter, for the profit is earned according to the stipulation: it is therefore necessary, as in the mudaraba. If they say simply « the profit is between us », without proportion, the partnership is corrupt according to the Hanafis and the Hanbalis: ignorance prevents discharging the due, and the profit is the object sought by the partnership, which may not be infringed, ignorance of the object of the contract entailing its nullity, as in sale and hire (Bada'i' al-Sana'i', 6/59; al-Fatawa al-Hindiyya, 2/302; Sharh Muntaha al-Iradat, 3/548; al-Rawd al-Murr, 2/70; Manar al-Sabil, 2/181).
The Malikis and the Shafi'is do not mention this condition: with them, the profit is in proportion to the capitals and does not depend on what the partners stipulate.
The Hanafis and the Hanbalis require the profit to be a common share of the whole, not a fixed amount: if they fix ten or one hundred, the partnership is not valid, for it is possible that this amount is not earned or that something else is. Likewise if they stipulate the profit of one of the two garments, of one of the two journeys, or the profit of a trade in a specific month or year: the partnership is not valid, for the gain may occur upon that specific amount and not upon the other, or the reverse, so that one of the two would monopolize the profit, which contradicts the purpose of the partnership: the contract requires that the partnership be realized in the profit, and the fixing cuts it, since it becomes possible that only the amount fixed for one be acquired.
Ibn Qudama, may Allah have mercy on him, says: it is not permitted to assign to one of the partners a surplus in dirhams. In short, as soon as the share of one is fixed in known dirhams, or dirhams are added to his share, for instance a share plus ten dirhams, the partnership is void. Ibn al-Mundhir, may Allah have mercy on him, says: all the scholars whose transmission I preserve agree on voiding the qirad when one of the two, or both, fix for themselves known dirhams. Among them: Malik, al-Awza'i, al-Shafi'i, Abu Thawr and the partisans of opinion (ahl al-ra'y). The answer is the same if one says « half the profit except ten dirhams » or « half the profit plus ten dirhams ».
Two reasons explain this invalidity. The first: he who fixes for himself known dirhams may earn nothing else and then appropriate the whole profit, or may not earn the dirhams and then take them from the capital, while the gain may be so large that the one for whom the dirhams were fixed is wronged. The second: the worker's share must be known by portions; when it cannot be by amount, it must be by portions: if the portions are unknown, the contract is corrupt, as is an unknown amount. The worker who fixes for himself dirhams may indeed slacken his pursuit of profit, finding no interest in it and letting others benefit, unlike one who holds a share of the profit (al-Mughni, 5/23; al-Ijma', no. 529; al-Ishraf, 6/209; Bada'i' al-Sana'i', 6/59; al-Fatawa al-Hindiyya, 2/302; Kashshaf al-Qina', 3/582; Sharh Muntaha al-Iradat, 3/550; al-Rawd al-Murr, 2/70; Manar al-Sabil, 2/181).
The Hanafis and the Hanbalis require the presence of the two capitals, but differ on the moment: at the contract or at the purchase. The Hanbalis require it at the contract: the partnership is not valid on a capital absent from the sitting of the contract, nor on a debt in liability (dhimma). If a man has a claim upon another and says: « Be my partner, the capital I contribute is the claim you have upon me », this is not valid, for the claim is absent property, upon which one cannot dispose immediately, whereas that is the purpose of the partnership. But if they have brought the capitals and then separated, and evidence of the partnership upon them subsists, the contract has indeed taken place (al-Mughni, 5/12; al-Insaf, 5/408; Kashshaf al-Qina', 3/582; Sharh Muntaha al-Iradat, 3/547; al-Rawd al-Murr, 2/70; Manar al-Sabil, 2/181).
The Hanafis require the capital to be a present substance, not a debt: what is claimed from people's liabilities cannot be a partnership's capital; two persons cannot make their claim upon another the capital of their partnership. The partnership is not valid either if the capital of one is a substance and that of the other a debt, nor if the property is absent, whether it be 'inan or mufawada: the purpose of the partnership is profit, obtained by disposal, impossible upon a debt or absent property; the purpose is therefore not attained. Presence is required at the purchase, not at the contract, for the contract of partnership is completed by the purchase. If a man hands a thousand dirhams to another saying: « Go out with their like, buy and sell, and what you gain will be between us », and the appointee establishes the proof that he did so, it is valid. If the property was present on neither side at the contract and is not present at the purchase, the partnership is not valid (Bada'i' al-Sana'i', 6/59; Durrar al-Hukam, 3/374).
The Malikis: if both capitals are absent, the partnership is not valid. If one of the capitals, or a part, is absent and the other present, the partnership is valid under two reservations: that the absence not be very long, namely a day or two; and that the one present not trade with the present capital before the absent capital arrives and is taken into hand. If the absence exceeds two days, the partnership is refused, likewise if the trade takes place only after the taking into hand; and if the absence is short but the trade occurred with the present before receiving the absent, the partnership is not valid. If the trade takes place nonetheless, the profit is shared as in the case of a long absence: al-Mudawwana reports that if one contributes a thousand and the other a thousand of which five hundred are absent, and the owner goes out to fetch it, while the other goes out with the whole present capital, misses him and buys with all he has, he is entitled only to a third of the surplus, that is of the profit. These two reservations are those of Ibn Yunus, whereas the words of al-Lakhmi imply not taking them into account (al-Sharh al-Kabir with Hashiyat al-Dasuqi, 5/7-8; Sharh Mukhtasar Khalil, 6/42; al-Tahbir, 4/241; al-Taj wa-l-Iklil, 4/144-145; Minh al-Jalil, 6/257).
The jurists of the four schools agree: when the partnership is corrupt, the profit and the loss therein are in proportion to the capital, each recovering the profit of his capital or bearing its loss. They then differ: does one partner recover from the other the wage of his work upon the latter's capital?
The majority, namely the Malikis, the Shafi'is (against the view of al-Qaffal) and the Hanbalis, answer yes: the contract sought profit in the other case; being corrupt, it gives right to the wage of the work, as in the qirad. The Hanafis and al-Qaffal of the Shafi'is answer no: the corrupt is like the valid as regards guarantee or its absence, and the valid partnership gives no rise to a wage of labour; likewise if it is corrupt. Here are the texts of each school.
The Hanafis: every corrupt partnership yields a profit in proportion to the capital: a thousand for one and two thousand for the other, the profit is divided by thirds, even if they had stipulated halves; and even if the capitals are equal and the profit stipulated by thirds, the condition of difference is void and the profit divided by halves, for it follows the capital in its existence, as the yield follows the seed in farming; the increase is earned only by stipulation, and it being corrupt, the entitlement remains in proportion to the capital. The yield (riy') denotes the increase: one says the earth yielded a crop, that is produce, for it is an increase (al-'Inaya Sharh al-Hidaya, 8/309; Sharh Fath al-Qadir, 6/194; al-Jawhara al-Nayyira, 3/438; al-Hindiyya, 2/335).
The Malikis: the partnership is corrupted by the condition of inequality in labour or profit at the contract; discovered before the work, the contract is rescinded; after the work, the profit is shared in proportion to the capitals, the corrupt condition being disregarded; the owner of the two thousand recovers his sixth of profit and the owner of the thousand the sixth of the total wage, one recovering from the other the wage of like labour, as in the qirad (al-Kafi, 1/391; al-Ishraf, 3/73-74, no. 932; al-Mu'una, 2/141; al-Sharh al-Kabir with Hashiyat al-Dasuqi, 5/13-14; al-Dhakhira, 8/52; Sharh Mukhtasar Khalil, 6/45; al-Tahbir, 4/247; Mawahib al-Jalil, 7/67; al-Taj wa-l-Iklil, 4/149-150; al-Sharh al-Saghir with Hashiyat al-Sawi, 8/3 and 5).
The Shafi'is: if the partnership is corrupt because equality of profit and loss was stipulated with unequal capitals, or difference of profit and loss with equal capitals, each recovers from the other the wage of his work upon the latter's capital, as in a corrupt qirad; this is due to each upon any corruption of the partnership whatsoever.
If three thousand dirhams are between two men, a thousand for one and two thousand for the other, and they contract a partnership on a profit by halves: if the holder of the two thousand stipulates upon himself a share of the labour, the partnership is corrupt; if they work, profit and loss are divided in proportion to the capitals, and each recovers the wage of his work upon his companion's capital. If the holder of the two thousand's work is worth three hundred and the holder of the thousand's one hundred and fifty, each deserves one hundred from his companion, and the sums are set off. If the holder of the thousand's work is worth three hundred and the other's one hundred and fifty, the first deserves two hundred and the second fifty, which are set off: one hundred and fifty remain to him. If each one's work is worth one hundred and fifty, the holder of the thousand deserves one hundred and the other fifty: after compensation, fifty remain to him. And if the holder of the two thousand stipulates the whole of the labour upon the holder of the thousand and fixes for himself half the profit, the partnership is valid, as is the qirad: the holder of the thousand earns a third of the profit by the partnership, having a third of the capital, and the other two thirds; by stipulating the whole labour upon the holder of the thousand and half the profit for himself, he fixed for the latter's work a sixth of the profit, which is permitted, as if he had concluded with him a qirad upon that sixth (Nihayat al-Matlab, 7/25; Rawdat al-Talibin, 3/482-483; al-Bayan, 6/369 and 371; Mughni al-Muhtaj, 3/189; Nihayat al-Muhtaj, 5/14; al-Dibaj, 2/300; al-Najm al-Wahhaj, 5/17).
The Hanbalis: as soon as a condition of the partnership is missed, it is corrupt; the profit is then in proportion to the capitals in the 'inan partnership as in that of workers, for the profit was earned by the capitals and follows their proportion, not the corrupt stipulation. But each recovers from his companion the wage of half his labour, having worked upon his companion's share by a contract that sought a gain in the other case: the labour must therefore receive a counterpart, as in the mudaraba. If one's work is worth ten dirhams and the other's five, they set off two and a half dirhams, and the holder of the ten recovers two and a half. In a corrupt partnership of persons (shirkat al-abdan), the wage of what they performed is divided by halves, each recovering as before the wage of half his work (Sharh al-Zarkashi, 2/146; Kashshaf al-Qina', 3/591; Sharh Muntaha al-Iradat, 3/560-561; Matalib Uli al-Nuha, 3/511; Manar al-Sabil, 2/181).
The jurists ask, when the whole capital perishes or one of the two capitals is destroyed, whether the loss is chargeable to both after mixing, to one alone without mixing, or to the owner alone. The Hanafis: if the whole capital perishes, the partnership is void; if one of the two capitals perishes before the mixing and before the purchase, it perishes from its owner alone, in his hand as in his partner's, for it is a deposit there; after the mixing it perishes upon both for lack of distinction, and the partnership is void. The object of the contract of partnership being the specified capital, which is specified as in gift and bequest, its loss voids the contract as in sale, unlike the mudaraba and simple agency. The partner whose property did not perish only consented to the sharing so as to be shared with in return should the other's property remain; that failing, the contract bears upon what he did not consent to and is void for want of benefit, namely the common sharing of the gain. If one buys with his capital and the other's perishes afterwards, the purchase remains between them according to their condition, ownership having arisen in common at the purchase (Bada'i' al-Sana'i', 6/60; Sharh Fath al-Qadir, 6/179-180; al-Hidaya, 3/8; al-Jawhara al-Nayyira, 3/431; Majma' al-Damanat, no. 640; al-Hindiyya, 2/320).
The Shafi'is: if one of the capitals perishes before the mixing and before the disposal, it perishes upon its owner alone, and the partnership is not established upon the remainder (Rawdat al-Talibin, 3/475; Mughni al-Muhtaj, 3/186; Nihayat al-Muhtaj, 5/8; al-Najm al-Wahhaj, 5/14; Asna al-Matalib, 2/254). The Hanbalis: if one of the capitals or a part perishes, even before the mixing, the loss is common to both, for the partnership established each one's ownership over half his companion's property: loss and growth are shared; the loss, even before mixing, weighs upon both in proportion, whether it comes from destruction or a fall in value (al-Mughni, 5/12; Kashshaf al-Qina', 3/584).
The Malikis, on the preferred view: what perishes of the capital before the mixing is chargeable to its owner alone if the capital is fungible, such as animals; otherwise if the loss follows the mixing, or if the capital is goods: the guarantee is then common. And if a thing perishes before the mixing, the partnership is not rescinded, for it binds by the contract. What was bought with the intact capital is between them according to their sharing, and the perished capital owes the price of its share in the partnership: if one buys goods for one hundred, the one whose capital perished owes half of the hundred for a partnership by halves. No difference is made between a physical mixing and a juridical mixing: placing the capitals in one house with two locks, each keeping the other's key, or putting each one's gold in a purse placed under one man's hand, in his chest or his saddlebag (al-Sharh al-Kabir with Hashiyat al-Dasuqi, 5/6-7; Sharh Mukhtasar Khalil, 6/41; al-Tahbir, 4/239-241; Mawahib al-Jalil, 7/61-62; al-Taj wa-l-Iklil, 4/143-144; al-Bahja fi Sharh al-Tuhfa, 2/351; al-Sharh al-Saghir with Hashiyat al-Sawi, 7/491).
Al-Mudawwana provides an illustration: two men partner, a thousand dirhams from each; each mints his sum and keeps it, without mixing them, until one of the two thousands is lost. Malik was asked and answered: if each keeps his dirhams without mixing them and a part is lost, it is chargeable to its owner, for these two men did not mix the capital of their partnership. But if they had minted each thousand separately in a cloth, then gathered the two with one of them or in one's saddlebag, and one of the two thousands were lost, the misfortune weighs upon both, even if each sum remained in its purse. Malik was further asked about two partners of two hundred dinars, one contributing one hundred 'uttaqi dinars, the other one hundred Hashimi dinars, then one of the two hundreds being lost while each sum was in its pouch: if each sum remains with its owner, the misfortune is his; if they gathered them in a saddlebag or with one of them, the misfortune is common, even if each sum is minted separately, for Malik held that there is no difference between 'uttaqi and Hashimi in the substance. It is finally reported the case of two partners of a thousand dirhams each who are to buy together, one of whom buys with a thousand engaged in the partnership while his companion's thousand perishes before the latter has bought: Malik sees a common loss, having said repeatedly that, for two partners of a thousand each left in their hands, each capital undergoes its own misfortune, unless they mix them or gather them in one saddlebag; but the one who bought performed with his thousand what his companion commanded him, so that the loss of the inactive thousand remains chargeable to its owner (al-Mudawwana al-Kubra, 5/70-71).
The Hanafis: if one of the two works upon the two capitals in an 'inan or mufawada partnership, and the other does not work, whether for an excuse or without excuse, the two are as if they had both worked, and the profit follows the condition; for entitlement to the profit in the partnership rests on the condition of labour, not on its existence, proof being the mudarib who deputizes the owner of the capital and earns the profit although the latter did nothing; the loss, for its part, is in proportion to the capitals (Bada'i' al-Sana'i', 6/63; al-Jawhara al-Nayyira, 3/429; al-'Inaya, 8/276; al-Muhit al-Burhani, 5/596; al-Bahr al-Ra'iq, 5/196; Majma' al-Damanat, 2/647).
The Hanafis add: if the 'inan partners buy goods, and then one says to his companion « I shall not work with you in the partnership » and departs, the one who remains works upon the goods: what accumulates belongs to him, charged with guaranteeing the value of his companion's share, for his word amounts to rescinding the partnership, and rescission by one of the partners is valid when the capital is in goods, unlike the mudaraba. The difference is that the partnership's capital is in the hands of both and the authority of disposal is shared: each may forbid his companion to dispose, whether the capital be in cash or in goods; in the mudaraba, on the contrary, once the capital is converted into goods, the mudarib's right is established therein because he has earned his profit and he alone disposes: the owner can no longer forbid him (al-Bahr al-Ra'iq, 5/199; Majma' al-Damanat, 2/642; Ibn 'Abidin, 4/327; Tanqih al-Fatawa al-Hamidiyya, 2/117; al-Hindiyya, 2/327).
The jurists then examine the acts a partner may perform upon the company's capital without his companion's authorization. The sheets cover seven cases:
First: travel with the company's capital. The jurists agree: if one authorizes his companion to travel with the capital and the latter travels, he guarantees nothing should the capital perish; and they also agree that, if one forbids his companion to travel and the latter departs despite the prohibition and the capital perishes, he guarantees his companion's share, having moved it without authorization; likewise if one says to the other: « Go as far as Damascus and do not pass it », and he passes Damascus for Baghdad and the capital perishes, he guarantees his companion's share.
They then differ: may one of the partners travel with the capital without the other's authorization? Abu Hanifa on the sound view reported from him, Muhammad ibn al-Hasan, the Malikis for the mufawada partnership, and the Hanbalis hold that the 'inan partner may travel with the capital without authorization, taking the capital with him, whether he needs porters and expenses or not; merchants count transport costs within the capital, not within the fine. The authorization of disposal is indeed established by the partnership itself, which was given without restriction; the absolute applies in its absoluteness absent contrary evidence; hence the depositary may travel, being in the position of a depositary, a trustee over the partnership's capital, with this difference that the partner holds an additional power, disposal: since the depositary may travel, the partner may all the more. On the view of whoever permits travel, if travel was explicitly authorized or he was told « act by your judgment », he may spend on himself, for lodging, upkeep and food, from the capital, according to al-Hasan's narration from Abu Hanifa. Muhammad said: this is istihsan (juristic preference): if he gains, the expense is counted within the profit; if not, it is from the capital, for the expense is a part of the wealth that perishes, as with the mudarib. Analogy would refuse it, for spending another's wealth is done only upon his express authorization.
The basis of this istihsan is custom: merchants customarily spend from the partnership's capital, and custom counts as a condition; moreover it is evident that both consent, for no one travels with another's capital bearing the expenses himself for an uncertain profit: their concluding the contract proves consent to expenses from the capital. Furthermore, each stands in the other's property like the mudarib: the profit comes from the whole of the capital and each deserves the common half of the profit like the mudarib; the expense is therefore borne by the whole, as the mudarib who travels with his own property and that of the mudaraba has his expenses covered by both.
The Malikis, the Shafi'is, Abu Yusuf, Abu Hanifa in one narration, and Ahmad in one narration, hold that travel with the capital is not permitted without the companion's authorization; if he travels, he guarantees what perishes or is lost, for travel involves risk and another's property is touched only upon authorization. According to Abu Yusuf, in one narration, a distinction is made between near and far travel: one who is not absent a night from his dwelling is as if he remained in the town. From him likewise, in another narration, travel is permitted for what requires neither porters nor expenses, and forbidden for what requires them: should the companion need it returned, the costs of return would harm him, whereas none are incurred for what requires no porters.
The Shafi'is add: if the partnership was concluded in a desert, one who travels to his destination guarantees nothing, the context deciding in his favour; likewise if the inhabitants of a town are driven out by famine or enemy and he cannot consult his companion: travel with the capital is permitted him, indeed required. The same for those whose custom is to go to several markets of different regions, such as some cloth sellers: travel is permitted by custom, even by sea where safety predominates; and it is fitting, besides, to formulate the authorization to travel in general terms.
The Hanbalis, on the sound view: travel is permitted to the partner if the land and the road are safe, as to the orphan's guardian, for the absolute authorization refers to custom, and the merchants' custom is to trade travelling as well as resident. If he travels where loss is most probable, he guarantees for negligence; likewise if he travels towards a place where safety is not predominant, like the orphan's guardian and the mudarib, even if they did not know the danger of the land or of the road, or the insolvency of a buyer: they do not guarantee what was lost in that way, not being negligent. But if the partner or an orphan's guardian knows that a punitive power rules over a land that seizes wealth, and he travels there and it is seized, he guarantees the wealth for having exposed it to seizure (Bada'i' al-Sana'i', 6/71-72; Majma' al-Damanat, 2/642; Durrar al-Hukam, 3/424 and 430; Fawakih al-Dawani, 2/121; Rawdat al-Talibin, 3/481; Mughni al-Muhtaj, 3/188; Nihayat al-Muhtaj with Hashiyat al-Shirwani, 5/11; al-Najm al-Wahhaj, 5/15; al-Dibaj, 2/299; Hawashi al-Shirwani, 5/290; al-Furu', 4/290; al-Mubda', 5/11; al-Insaf, 5/418-419; Kashshaf al-Qina', 3/587-588; Sharh Muntaha al-Iradat, 3/553-554).
Ibda' derives from the verb « abda'a »: the bida'a denotes, among its meanings, the portion of wealth sent for trade, and « abda'ahu al-bida'a » means to hand it to him. The jurists define ibda' as the sending of capital with someone to trade gratuitously, the whole profit going to the worker and his companion; the principle is that the ibda' be gratuitous on the worker's part, but the Malikis count it as ibda' even when remunerated. Its ruling is permission, for it is a path to the growth of the capital in the partners' interest, and a custom of merchants based on mutual aid in displaying goods and taking turns at the markets. The mudaraba consists in handing capital to someone to make it work, the profit being shared according to their agreement.
The jurists differ: may one of the partners consign, make a mudaraba or partner with the company's capital without the other's authorization? The Hanafis, the Malikis and Ahmad in one narration hold that each of the mufawada and 'inan partners may consign the capital, for it is a custom of the contract of partnership; he may likewise hire a trader's services without compensation drawn from the other; and this is less harmful: whoever owns the more harmful owns the less. He may also place the capital in deposit, for it is customary and the trader cannot dispense with it.
He is also permitted to hand the capital as a mudaraba on the Hanafis' sounder view, for the loss binds the partner, not the mudarib: the partnership therefore includes the mudaraba. According to Abu Hanifa, this would not be permitted to him, the mudaraba being a kind of partnership: the owner of the capital shares the profit with the mudarib, and he cannot create a partnership by the mere issuance of the contract, hence no mudaraba. The sounder view is the first, the narration of the foundation: the partnership is not what is sought, only the profit, and it is as if one hired someone for part of the works of trade; it is even more fitting, for the hired worker earns his wage whether the profit occurs or not, whereas the mudarib earns nothing by his labour without profit. The argument from the partnership is unsound, the partnership being above the mudaraba: it entails the common holding of the principal and the fruit, the mudaraba that of the fruit alone; now a thing entails what is below it, not what surpasses or resembles it. That is why the mudarib cannot hand the capital as a mudaraba by the issuance of his contract, the mudaraba resembling the mudaraba, but he may appoint an agent, agency being below it; likewise the agent cannot appoint another by the issuance of his agency, agency resembling agency. The partner may do with the company's capital all that the mudarib does with the mudaraba's capital, his disposal being stronger and wider; he may also take capital as a mudaraba and monopolize the profit, the mudarib earning the profit by his labour like a hireling (Bada'i' al-Sana'i', 6/68-69; Sharh Fath al-Qadir, 6/183-184; al-Jawhara al-Nayyira, 3/432; al-Hidaya, 3/9; al-'Inaya, 8/289; Majma' al-Damanat, 2/639; al-Lubab, 1/532; Mukhtasar al-Wiqaya, 2/182).
The Malikis: the mufawada or 'inan partner may consign the capital without authorization by handing it to someone to buy goods from such a land, remunerated or not; if remunerated, it is called consignment for hire. It is likewise permitted to him to conclude a qirad by handing the company's capital to someone who will make it fructify for a known share of the profit; al-Lakhmi limited each of these cases to ample capital that requires it (al-Mudawwana, 13/75; al-Sharh al-Kabir, 5/9; Sharh Mukhtasar Khalil, 6/43; al-Tahbir, 4/243; Mawahib al-Jalil, 7/64; al-Taj wa-l-Iklil, 4/147; Fawakih al-Dawani, 2/121).
A remark: the transmission is ambiguous among the Malikis as to whether what is permitted to the mufawada partner is also permitted to the 'inan partner. Al-Dardir reports in al-Sharh al-Kabir that the mufawada partner may gratuitously dispose of part of the capital if he consigns it for trade, and that this and what follows apply to the 'inan partnership too; whatever is permitted to one in the mufawada is thus permitted in the 'inan. Al-Nafrawi, may Allah have mercy on him, nonetheless noted that the author summarized without clarifying whether the partner may dispose without his companion's authorization: the gist of Khalil's words is that if each granted the other absolute disposal at the contract or after, in a mufawada partnership, each may dispose according to interest without authorization: sell, buy, accept, delegate, accept the defect, even if his companion refuses; if they remained silent at the contract, or if one forbade verbally, it is an 'inan partnership, likewise permitted, but disposal there is valid only with the companion's authorization. The 'inan partnership is thus the opposite of the mufawada. This is also what al-Khirshi implies: « If they stipulate the negation of initiative, it is 'inan », the 'inan partnership being so named after the beast's tether: each stipulated to his companion that he do nothing in the partnership without his authorization and without his knowledge, as if he had grasped his tether. However, al-Dardir's statement being clear, I followed it, and Allah knows best what is correct (Sharh Mukhtasar Khalil, 6/49; Fawakih al-Dawani, 2/121).
The Shafi'is and the Hanbalis in the school: the partner may not consign any of the company's capital without his companion's authorization, that is hand it to someone to trade with the whole profit to the giver and his companion, because of the gharar it involves and because the partner is not satisfied with another hand; if he does so, he guarantees; with authorization, it is permitted. Nor may he make a mudaraba with the company's capital, that establishing rights upon the capital and making the profit deserved by another (Mughni al-Muhtaj, 3/188; Nihayat al-Muhtaj with Hashiyat al-Shirwani, 5/11; al-Najm al-Wahhaj, 5/15; al-Dibaj, 2/299; Asna al-Matalib, 2/257; al-Mughni, 5/14; al-Muharrar, 1/351; al-Furu', 4/290; al-Insaf, 5/417; Kashshaf al-Qina', 3/586-587; Sharh Muntaha al-Iradat, 3/555; Matalib Uli al-Nuha, 2/507).
The jurists differ: may one of the partners bring a third party into the company's capital without the other's authorization? The Hanafis: the 'inan partner may not do so without authorization, for a thing does not entail its like. If a man partners another in an 'inan partnership, what the partner buys is half his and half the two partners': unable to create a partnership over his companion's share, he may appoint an agent, and the contract of partnership includes agency, so that half his purchase is between them. If it is the partner who did not bring in the third who buys, his purchase is divided by halves between him and his companion, nothing going to the outsider, who was not appointed: the purchase remains under the ruling of the partnership.
Al-Hasan ibn Ziyad, may Allah have mercy on him, says: if one of the 'inan partners partners a man in a mufawada partnership without his companion's presence, it is not a mufawada but an 'inan partnership, for the mufawada requires the rescission of the 'inan partnership: the mufawada partner must be companion over the whole capital, which is not possible with regard to the absent companion; rescission being impossible in his absence. If the operation is done in the companion's presence, the mufawada is valid and voids the 'inan partnership, rescission then being permitted. As for the mufawada partner, he may partner another in an 'inan partnership according to Abu Yusuf and Muhammad, for the 'inan partnership is narrower than the mufawada and below it: the mufawada may contain it as the 'inan contains the mudaraba; the father being able to do so with his son's property, the mufawada partner may all the more over his companion. Al-Hasan reports from Abu Hanifa that this is not permitted to him, for it establishes a right for a third partner upon the companion's capital, which is permitted only upon his authorization. If he partners a man in an 'inan partnership, that is the previous case; if he concludes a mufawada, it is valid upon him and upon his companion, as Muhammad reports in the foundation (al-Asl). Abu Yusuf allows it not, nor does al-Hasan from Abu Hanifa; Muhammad's view rests on the fact that the mufawada contract is general, each one's disposal counting as the other's; Abu Yusuf answers that the mufawada is a partnership resembling the mufawada, and a thing does not entail its like (Bada'i' al-Sana'i', 6/69 and 74; al-Jawhara al-Nayyira, 3/433).
The Malikis: the mufawada or 'inan partner may bring a third party into a determinate portion of the company's capital without his companion's authorization; the determinate portion means a part of the capital such that the hand of the one brought in cannot roam over the whole, and this holds even in mufawada upon that portion (al-Sharh al-Kabir, 5/9; Sharh Mukhtasar Khalil, 6/43; al-Tahbir, 4/243; al-Taj wa-l-Iklil, 4/147).
The Shafi'is and the Hanbalis: the partner may not bring anyone into the company's capital without his companion's authorization, that establishing rights upon the capital and making the profit deserved by another (al-Najm al-Wahhaj, 5/15; al-Dibaj, 2/299; al-Mughni, 5/15; Kashshaf al-Qina', 3/586; Sharh Muntaha al-Iradat, 3/555).
The Hanafis and the Hanbalis in the school hold that the partner may deposit the company's capital without the other's authorization in case of need: it is the merchants' custom, need may require the deposit, which is among the necessities of the partnership, like handing luggage to a porter; and since the partner may entrust the capital to a paid keeper, he may all the more entrust it to a gratuitous depositary. According to Imam Ahmad, in one narration, it is not permitted, for it is not of the partnership and involves gharar (al-Jawhara al-Nayyira, 3/432; al-Hidaya, 3/9; al-'Inaya, 8/289; Mukhtasar al-Wiqaya, 2/182; Durrar al-Hukam, 2/196; al-Mughni, 5/14; al-Muharrar, 1/351; al-Furu', 4/290; al-Insaf, 5/417; Kashshaf al-Qina', 3/587; Sharh Muntaha al-Iradat, 3/555; Matalib Uli al-Nuha, 2/507).
The Malikis: the partner may deposit the company's capital for a reason, such as alighting in a feared place, without his companion's authorization; if he deposits without reason and the capital perishes, he guarantees it, whether the capital be ample or not; the claim of a reason is accepted. And if a man entrusts a substance to a man and the depositary sells it, he guarantees it by the very sale, not by the failure to return it, for the depositary's sale is not permitted by any consensus (al-Sharh al-Kabir, 5/9; Sharh Mukhtasar Khalil, 6/43; al-Tahbir, 4/243; Mawahib al-Jalil, 7/64; al-Taj wa-l-Iklil, 4/147; Fawakih al-Dawani, 2/121; al-Bayan, 6/381; al-Ijma', no. 565).
The Shafi'is and the Hanbalis in one narration forbid one of the partners to sell on deferred payment without his companion's authorization, for it deceives as to the property; if he does so, the sale is valid upon his share, the partnership is rescinded upon it, and the thing becomes common between the buyer and the companion (Rawdat al-Talibin, 3/480; Mughni al-Muhtaj, 3/188; Nihayat al-Muhtaj with Hashiyat al-Shirwani, 5/10; al-Najm al-Wahhaj, 5/15; al-Dibaj, 2/299; Asna al-Matalib, 2/257).
The Hanafis and the Hanbalis in the school permit the partner, in mufawada as in 'inan, to sell on deferred payment, that is for a known term: the authorization to sell contained in the partnership is absolute, the partnership is concluded upon the merchants' custom of selling for cash and on credit, and the purpose is profit, greater in the credit sale; whatever the fall in price, he owes no guarantee, unless he sold to a man of doubtful trustworthiness or unknown to him: he then guarantees the price lost upon the buyer (Bada'i' al-Sana'i', 6/68; al-Jawhara al-Nayyira, 3/432; Sharh Fath al-Qadir, 6/155; al-Bahr al-Ra'iq, 5/182; al-Lubab, 1/532; Ibn 'Abidin, 4/305; al-Mughni, 5/14; al-Kafi, 2/260; al-Muharrar, 1/351; al-Mubda', 5/10; al-Furu', 4/290; al-Insaf, 5/415-416; Kashshaf al-Qina', 3/586; Sharh Muntaha al-Iradat, 3/553; Matalib Uli al-Nuha, 2/503).
The Malikis: the mufawada or 'inan partner may sell on credit, that is for a known price at a known term; if he sells on credit and the buyer goes bankrupt or dies insolvent, the price is lost upon both, not upon the seller alone. As for buying on credit, two views are held: on the first, one does not buy on credit outside a determinate thing, neither one nor both, lest the partner consume the profit of what is not guaranteed, the claim being guaranteed by the buyer; if he buys on credit without authorization, his companion chooses between accepting and rejecting, the price then weighing upon the buyer alone; if he is authorized to buy a determinate good on credit, it is permitted, but not if it is not determinate (« any goods you find and like, buy them on credit »). On the second view, which is the school's, buying on credit is permitted, people being unable to dispense with it, with no difference between selling and buying on credit (al-Sharh al-Kabir with Hashiyat al-Dasuqi, 5/9-10; Sharh Mukhtasar Khalil, 6/44; al-Tahbir, 4/244; al-Taj wa-l-Iklil, 4/147; Fawakih al-Dawani, 2/121).
The Hanafis: each of the two partners may sell at a low or high price, for the authorization to sell contained in the partnership is absolute and the partnership is concluded upon the merchants' custom, of which this is part; except for that in which people do not underprice, for the purpose of the contract, the gain, is not attained by it, which excludes it by the contract's indication. It has also been said that the question follows the disagreement on agency to sell in general: according to Abu Hanifa, each may sell for what is hard to obtain and at a discount; according to his two companions, it is permitted only at the like price or with an underpricing in which people do not underprice (Bada'i' al-Sana'i', 6/68; al-Jawhara al-Nayyira, 3/433).
The Shafi'is: the partner's disposal is like the agent's: he neither sells nor buys with flagrant loss without the companion's authorization. If he sells with such a loss, the sale is not valid upon the companion's share and is valid upon his own on the sound view; the partnership is rescinded upon the thing bought or sold, which becomes common between the seller or the buyer and the companion if he bought it as substance of the capital. If he buys on credit, the thing does not belong to the companion, and the price weighs upon his pure property. If one sells property of the partnership at a price below the like price to an extent in which people do not underprice, the sale is void upon the companion's share, the absolute authorization requiring the like price; is the sale void also upon the seller's share? Two views, according to the two views on the splitting of the transaction: if it is said to be valid upon the seller's share, the two remain in partnership as they were; if it is said not to be, the partnership is void as to the thing sold, the seller's share passing to the buyer, who becomes the companion's partner. Abu Ishaq, may Allah have mercy on him, adds that the seller does not guarantee the companion's share so long as he has not delivered it: this is a domain of juristic effort (ijtihad) given the existence of differences (al-Bayan, 6/380-381; Rawdat al-Talibin, 3/480-481; Mughni al-Muhtaj, 3/188; Nihayat al-Muhtaj with Hashiyat al-Shirwani, 5/11; al-Najm al-Wahhaj, 5/15; al-Dibaj, 2/299; Asna al-Matalib, 2/257).
The Hanbalis: one of the partners may not show favouritism by selling below the like price or buying above it, for the partnership was concluded to trade with the capital, and this is not part of it; it is a gratification to which he has no right, and it contradicts the purpose of the partnership, the seeking of profit (al-Mughni, 5/13; al-Kafi, 2/261; al-Mubda', 5/9; Kashshaf al-Qina', 3/586; Sharh Muntaha al-Iradat, 3/554).
The Malikis: the mufawada or 'inan partner may, without his companion's authorization, give away part of the company's capital, by gift or otherwise, provided he does so to attract customers and make people wish to buy from the partnership: it redounds to the benefit of the capital. He may likewise give away a light thing of the capital without any aim of attraction, such as lending a tool, a utensil, giving a morsel to a beggar or a draught of water (al-Sharh al-Kabir with Hashiyat al-Dasuqi; Sharh Mukhtasar Khalil; al-Tahbir; Mawahib al-Jalil; al-Taj wa-l-Iklil; Fawakih al-Dawani). This part ends here, the text continuing in the second part of the chapter.